FORM 10K

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

MARK ONE

X     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
      SECURITIES EXCHANGE OF 1934

      FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
                                       OR
            TRANSITION REPORT pursuant to section 13 or 15(d) of
            the securities exchange act of 1934

      FOR THE TRANSITION PERIOD FROM N/A TO N/A

                          COMMISSION FILE NUMBER: 1-100

                             CROFF ENTERPRISES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

UTAH                                                87-0233535
STATE OF INCORPORATION          (I.R.S. EMPLOYER IDENTIFICATION NUMBER)

                                  1675 BROADWAY
                                   SUITE 1030
                            DENVER, COLORADO  80202
                          ADDRESS OF PRINCIAL ZIP CODE
                                 EXECUTIVE OFFICES

Registrant's telephone number, including area code:       (303)628-1963

Securities registered pursuant to Section 12(b) of the Act:
                                          Name of each exchange on
            Title of each class                which registered
            Common - $0.10 Par Value                  None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registration (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  YES   X      NO

As of March 1, 1998, the aggregate  market value of the common voting stock held
by non-affiliates of the Registrant, computed by reference to the average of the
bid and ask price on such date was: $435,000

As of March 1, 1998,  the Registrant  had  outstanding  516,315 shares of common
stock ($0.10 par value)




<PAGE>



                                TABLE OF CONTENTS


                                     PART I


ITEM 1            BUSINESS..............................................       3


ITEM 2            PROPERTIES.............................................      6


ITEM 3            LEGAL PROCEEDINGS.................................          11


ITEM 4            SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..       11


                                     PART II


ITEM 5            MARKET FOR REGISTRANT'S COMMON EQUITY.......................12


ITEM 6            SELECTED FINANCIAL DATA.....................................13


ITEM 7            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS.......................  13


ITEM 8            FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA..................15


ITEM 9            CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                  ON ACCOUNTING AND FINANCIAL DISCLOSURES...............      15


                                    PART III


ITEM 10     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT....            15


ITEM 11     EXECUTIVE COMPENSATION........................................... 16


ITEM 12     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
            AND MANAGEMENT................................................... 18


ITEM 13     CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS..........           18


                                     PART IV


ITEM 14     EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES AND
            REPORTS ON FORM 8-K.............................................. 19

            SIGNATURES....................................................... 20

            FINANCIAL STATEMENTS............................................. 21




<PAGE>



ITEM 1.     BUSINESS

    (a)   Description of Business

      Croff Enterprises, Inc. (formerly Croff Oil Company) and hereafter "Croff"
or "the Company,  was incorporated in Utah in 1907 as Croff Mining Company.  The
Company  changed its name to Croff Oil Company in 1952,  and in 1996 changed its
name to Croff Enterprises,  Inc. The Company, however,  continues to operate its
oil and gas properties as Croff Oil Company. The principal office of the Company
is located at 1675 Broadway,  Suite 1030, Denver,  Colorado 80202. The telephone
number is (303) 628-1963.

      Croff  is  engaged  in  the  business  of  oil  and  gas  exploration  and
production,  primarily  through  ownership of perpetual  mineral  interests  and
acquisition of oil and gas leases.  The Company's  principal activity is oil and
gas production from non-operated  properties.  The Company also acquires,  owns,
and sells,  producing and non-producing  leases and perpetual mineral interests.
Over the past ten years,  Croff's primary source of revenue has been oil and gas
royalties from producing  mineral  interests.  Croff  participates  as a working
interest owner in approximately 35 wells. Croff holds small royalty interests in
over 200 wells. In 1997,  Croff purchased  working  interests in five new wells,
three gas wells in Michigan,  a gas well in Colorado,  and an oil well in Texas.
In addition,  Croff purchased a larger interest from Exxon in the Rentuer, a gas
and oil well in  Wyoming,  and an oil well in  Colorado.  All of the wells  from
which Croff receives  revenues are operated by other  companies and Croff has no
control over the factors which determine royalty or working  interests  revenues
such as markets, prices and rates of production.

      After the drop of oil prices during 1986, the Company did not  participate
in exploration  drilling through 1990. The Company in 1990, after paying off the
last of its'  long-term  debt,  again  began to  acquire  producing  oil and gas
leases,  and took a minor  interest in a new well in 1991 and 1992. In 1992, the
Company purchased working interests in eleven wells,  royalty interests in three
wells,  and participated in a workover of an existing working interest wells. In
1993, the Company  purchased a stripper  field in South Texas,  and sold it to a
local  operator,  reserving  a  carved-out  production  interest,  secured  by a
mortgage on the field. In 1994, the Company continued to purchase  producing oil
and  natural gas wells.  In 1995,  Croff  purchased a two percent  interest in a
mortgage note secured by an equal interest in an Indiana Coal Mine. This venture
failed when the utility  canceled  the coal  contract and Croff had to write off
most of this  investment.  In 1996, the Company sold its  carved-out  production
interest in South Texas and  purchased  three  interests in oil and gas wells in
Wyoming  and  Colorado.  In 1997,  the  Company  leased  several  tracts  of its
perpetual mineral interests in Northeast Utah as drilling activity increased.

      Since 1991,  Croff has purchased  interests in publicly traded oil and gas
companies out of cash reserves.  The Company intends to earn a better yield than
cash on these current funds,  which will be liquidated,  as needed,  to fund the
purchase of oil and gas wells or other natural resource investments.

      Croff  has one  part-time  employee,  the  President,  and  two  Assistant
Secretaries,  who work for the Company as part of its  contracted  office  space
arrangement described in Item 13.

      (b)   Current Activities

      In 1997,  the  Company  reported a slight  loss,  which was the first loss
reported by the Company in over five years. This loss was due to a write down of
the Company's investment in Carbon  Opportunities,  L.L.C. The Company, in March
of  1995,  purchased  a 2%  interest  in  Carbon  Opportunities,  L.L.C.  Carbon
Opportunities,  L.L.C. had purchased a non-performing $6,000,000 note secured by
the Buck Creek  Coal Mine.  The only  source of  repayment  of the note was from
operations at the Buck Creek Coal Mine. In December, 1995, the utility which was
the major  purchaser of coal from the mine,  canceled the contract.  Later,  the
mine filed a Chapter 11  bankruptcy.  By the third quarter of 1997, it was clear
that the mine would not be  reopened,  the lawsuit  against the utility had been
lost at the  trial  level,  and  liquidation  of the  equipment  would not yield
sufficient monies to recoup the investment.  The Company determined that $62,000
of its original  $100,000  investment  would have to be written off. The Company
had received  $18,000 of its original  investment and had written the investment
down to approximately  $82,000.  Subsequently,  the Company received $4,000, and
there remains cash and equipment left to be liquidated of approximately $16,000,
which is the  remaining  value of this asset on the  Company's  books.  The only
other  recovery  would  be if  the  litigation  were  reversed  on  appeal  or a
settlement was reached.  Management of the Company does not feel this is likely.
The  Company  now  considers  this a  liquidated  asset and expects to debit any
monies received against its remaining value on the Company's books.

      In 1996, the shareholders  voted to adopt changes in the capital structure
of the  Company in order to provide  more  liquidity  to the  shareholders.  The
purpose of this  recapitalization  was to allow the  Company to pursue  ventures
outside of the oil and gas business  while  retaining the Company's core oil and
natural  gas  assets.  In order  to do  this,  the  Company  created  a class of
Preferred B stock to which all of the perpetual  mineral interests and other oil
and gas assets were pledged.  Thus the Preferred B stock  represents the oil and
gas assets of the Company  and all other  assets are  represented  by the common
stock. Each common  shareholder  received an equal number of Preferred B shares,
one for one, at the time of this restructuring of the capital of the Company.

      Since  1996,  the Board has  looked  for a  merger,  acquisition  or other
business   combination   using  the  common  stock.   Such   transaction   would
substantially  dilute  the  existing  shareholders,  but which  would  allow the
Company to grow to a size where it could be actively  traded and a market  would
develop for the common shares. At the same time, the Board decided to change the
name of the Company to Croff  Enterprises,  Inc., but to continue to operate the
oil and gas business as Croff Oil Company.

      The  Preferred B shares are not  registered  or publicly  traded,  but are
bought and sold through a  clearinghouse  which the Company holds each year. Any
shareholder  or any  outsider  is able to bid  and  ask  for the  shares  of the
Company.  This process first took place in January and February of 1997,  and is
currently in process in 1998.  In 1997,  the sale of the Preferred B shares were
closed at prices ranging from $.75 to $.90 per share. In 1998, the average price
is  approximately  $1.00 per share.  In 1997,  approximately  13,365 shares were
traded, and in 1998 approximately  30,000 shares have been offered.  This system
provides some liquidity to the Preferred B shareholders,  and is paid for by the
Company without charge or commission to the shareholders.

      The Company has had  negotiations,  at this point,  with  several  private
companies which were interested in merging with Croff in order to become public.
These negotiations  occurred  throughout 1997 and are continuing.  None of these
negotiations  have  reached  agreement.  The Board has  adopted an  acquisitions
strategy,  however,  as a long term strategy,  and intends to continue to search
for a potential  partner or  acquisition  which would be of most  benefit to the
common  shareholders  and  create  the  strongest  public  market for the common
shares.

      With  respect to the oil and gas assets of the  Company,  the  Company has
been active.  In 1998, the Company is currently  negotiating for the purchase of
working  interests  in five  natural gas wells in  Oklahoma,  which would be the
largest acquisition the Company has made of producing oil and gas assets.  While
no contract has been entered into as of the day of this writing, it appears that
the  acquisition  may be  consummated  within 30 days.  The Company is currently
negotiating  with its bank to borrow a portion of the  proceeds to purchase  the
gas wells in  Oklahoma.  In 1997,  the  Company  purchased  an interest in seven
wells.  The Company  increased  its  interest in the Rentuer oil and gas well in
Wyoming, by purchasing a portion of Exxon's interest,  which had been put up for
sale.  The Company  purchased  an interest in a helium and gas well in Southeast
Colorado.  The Company also purchased a working interest in an oil well in North
Dakota.  In November of 1997,  the  Company  purchased  an interest in three gas
wells in Michigan for approximately $50,000. The Company then purchased a larger
interest in the Jones well in Colorado.  Income from these wells should start in
1998, and should increase the Company's gas income.

      The  Company  in 1996  purchased  three  interests  in oil and gas  wells,
primarily an oil and gas well in Campbell County,  Wyoming. The Company was also
the beneficiary of increased  drilling and higher prices in San Juan County, New
Mexico,  and La Plata  County,  Colorado,  from  coal gas  methane  wells  which
produced  higher  revenues.  The  Company  also  received  a 1/16  royalty in an
offsetting gas well to the Company's current production in Western Colorado. The
Company entered into two leases for additional drilling on its mineral interests
in the Blue Bell Altamont field in northeast Utah.

      In the second quarter of 1996, the Company sold its carved-out  production
interest  in the  Taylor  Ina  field in Medina  County,  Texas.  This  carve-out
production  interest was sold for cash in the approximate  amount of $106,000 to
the operator of the field. The Company determined that the property had declined
to a sufficient point, that its sale would yield sufficient monies that could be
reinvested  in  other  oil and gas  properties  to  provide  a  higher  and more
consistent yield at less risk. The operator in Medina County, Texas, was able to
borrow  sufficient  monies to buy out Croff for cash.  Also  during  the  second
quarter,  the Company sold its  interest in a North Dakota well for cash,  which
well  required a  significant  workover.  This allowed the Company to accumulate
significant amounts of cash to attempt to secure other oil and gas interests and
to increase  current  assets as a part of its package of making the Company more
attractive  in  order  to grow  the  Company  by the  acquisition  of a  private
business.

      In 1995,  the Company also  purchased a small  interest in the Ash Unit, a
pooled oil field in Campbell County, Wyoming. The Company also participated in a
small  interest in a gas well in Wyoming and as a royalty  owner,  it  continued
development in the Bluebell-Altamont Field.

      In 1994, the Company  purchased small  non-operating  working  interest in
three oil wells and one gas well. It purchased a royalty  interest in a gas well
in Texas. In 1994, the Company received an increase in production from coal seam
gas wells in La Plata County, Colorado, and San Juan County, New Mexico.

      In 1993,  the Company  purchased a small stipper  field in Medina  County,
Texas.  The Company paid  $135,000 in  aggregate  for this field during 1993 and
1994.  The Company  entered  into an agreement  with a local  operator in Medina
County,  Production Resources,  Inc., to purchase the production company and the
leases,  subject to a carved-out  production  payment to Croff Oil Company.  The
carved-out  production  payment is  secured by a mortgage  on the leases and the
equipment.  The local operator does not have significant financial resources, so
the continued payment of the "carved-out production payment" is dependent on the
ability of the operator to stay in business,  which is dependent on the price of
oil. The Company sold this field in 1996 for  $106,000.  At the time of the sale
the  production  payments  had totaled over  $70,000 on the  Company's  $135,000
investment.

      (c)   Major Customers

      Customers which accounted for over 10% of revenues were as follows for the
years ended December 31, 995, 1996 and 1997:
                                          1995        1996              1997
      Oil and gas:
ANR Production Company                    25.3% *     23.7%             23.0%
Burlington Resources Oil and Gas Company ------       10.5%             18.4%
Oasis Oil company                         15.6%     -------          --------
Pennzoil Production Company               11.9%       11.1%             12.2%
      *Includes Coastal Production Company

      (d)   Financial Information About Industry Segments

      The  Company's  operations  presently  consist of oil and gas  production.
During  previous years the Company has generated  revenues  through the purchase
and resale of oil and gas leasehold interests,  however, no significant revenues
were  generated  from this source for the last five years.  Further  information
concerning the results of the Company's  operations in this one industry segment
can be found in the Financial Statements.

      (e)   Environmental and Employee Matters

      The Company's interest in oil and gas operations are indirectly subject to
various laws and governmental  regulations concerning  environmental matters, as
well as employee  safety and health within the United  States.  The Company does
not  believe  that it has any direct  responsibility  for or control  over these
matters as it does not act as operator of any oil or gas wells.

      The  Company  is  advised  that  oil and gas  operations  are  subject  to
particular and extensive environmental concerns, hazards, and regulations. Among
these regulations  would be included the Toxic Substance Control Act;  Resources
Conservation  and Recovery Act; The Clean Air Act; The Clean Water Act; The Safe
Drinking Water Act; and The Comprehensive  Environmental Response,  Compensation
and Liability Act (also known as  Superfund).  Oil and gas  operations  are also
subject to  Occupational  Safety and Health  Administration  (OSHA)  regulations
concerning employee safety and health matters.  The United States  Environmental
Protection Agency (EPA),  OSHA, and other federal agencies have the authority to
promulgate regulations that have an impact on all oil and gas operations.

      In addition,  various state and local authorities and agencies also impose
and regulate  environmental  and  employee  concerns  pertaining  to oil and gas
production,   such  as  The  Texas  Railroad   Commission.   Often,  though  not
exclusively,  compliance  with  state  environmental  and  employee  regulations
constitutes and exemption or compliance with federal mandates and regulations.

      As indicated  above,  the Company does not have any direct control over or
responsibility  for  insuring  compliance  with such  environmental  or employee
regulations as they  primarily  pertain to the operator of oil and gas wells and
leases.  In no instances  does the Company act as the operator.  The effect of a
violation  by an Operator of a well in which the Company had a working  interest
would  be that the  Company  may  incur  its  pro-rata  share of the cost of the
violation.

      The  Company is not aware of any  instance  in which it was found to be in
violation of any environmental or employee  regulations or laws, and the Company
is not subject to any present  litigation or claims concerning such matters.  In
some  instances  the  Company  could in the  future  incur  liability  even as a
non-operator  for potential  environmental  waste or damages or employee  claims
occurring  on oil and gas  properties  or  leases in which  the  Company  has an
ownership interest.


I
TEM 2.     PROPERTIES

      (a)   Oil and Gas Mineral Interests and Royalties

      The Company owns perpetual  mineral  interests  which total  approximately
4,600 net mineral acres, of which  approximately  1,100 net acres are producing.
The mineral  interests  are located in 110,000  gross acres in  Duchesne,  Utah,
Wasatch and Carbon Counties in Utah, and  approximately  40 net mineral acres in
La Plata County, Colorado, an San Juan County, New Mexico.

      In 1997, there was increased leasing on the Company's  mineral  interests.
After a period of  approximately  four years in which there was minimal leasing,
the Company  entered into four leases on acreage in Duchesne  County,  Utah,  in
1997. This generated  several thousand dollars in lease bonus revenue and should
result  in some  production  on this  acreage  in the  next  three  years if the
drilling is  successful.  In  addition,  the company  has  received  new royalty
payments from  development  drilling on previously  leased  acreage in Northeast
Utah.

      In 1996, the company sold its carved-out production payment on 110 stipper
wells in Medina county,  Texas,  which it had purchased in 1993. This carved-out
production payment operated  similarly to a royalty,  with the Company receiving
200 barrels of oil a month,  without operating  expenses.  The Company sold this
interest for approximately $106,000 after owning this interest for approximately
three years.

      As of  December  31,  1997,  the  Company  was  receiving  royalties  from
approximately 200 producing wells in the
Bluebell-Altamont  field in Duchesne and Uintah Counties,  Utah.  Royalties also
were  received  from  scattered  interests  in  Wyoming,  Colorado,  New Mexico,
Alabama,  and  Texas.  Oil and  gas  revenues  to the  Company,  primarily  from
royalties,  were approximately  $193,000 in 1997,  $216,000 in 1996, $196,000 in
1995, and $197,000  during 1994.  Natural gas income  increased in 1996 and 1997
with  increased  gas sales from  royalties  on coal bed  methane gas in San Juan
County,  New Mexico,  and new wells in Western  Colorado  and  Wyoming.  Royalty
income is contingent upon market demand,  prices,  producing  capacity,  rate of
production, and taxes, none of which are in the control of the Company.

      The most  important  factor to the  Company's  revenue and profit,  is the
price of oil and natural  gas. Oil prices have  dropped  drastically  during the
last year with posted  prices for sweet oil in Utah dropping from around $23 per
barrel in  January  to a low of less than $17 per barrel by the end of the year.
The drop in prices  continued  into 1998,  and  currently  prices,  adjusted for
inflation,  are near the extreme lows of 1986. The market in oil prices,  having
declined from 1990 to 1993, turned around, and average oil prices increased from
1994 to 1996.  In 1997,  they  started  down and rapidly  declined to 1993 price
levels.  Natural gas prices in 1997 were stable at the higher level of $2-$3 per
MCF achieved by the final two months of 1996.  Natural gas prices averaged $2.03
for the Company in 1997,  the average  price being  higher for the first half of
the  year.  The  average  price in 1996 was $1.86  per MCF.  The warm  winter of
1997-1998 is contributing to the currently  falling natural gas prices.  Because
most of  Croff's  natural  gas is in the Rocky  Mountains,  Croff Oil  Company's
average  price for natural gas was not as high as gas producers in Texas and the
Gulf area received.

      (b)   Oil and Gas Working Interests

      In 1997,  the Company  purchased an interest in seven  wells.  The Company
increased its interest in the Rentuer oil and gas well in Wyoming, by purchasing
a portion of Exxon's interest. The Company purchased an interest in a helium and
gas well in Southeast Colorado. The Company also purchased a working interest in
an oil well in North  Dakota.  In November of 1997,  the  Company  purchased  an
interest in three gas wells in Michigan for approximately $50,000.

      During  1996,  the Company  purchased  an interest in the Rentuer  well in
Campbell  County,  Wyoming,  and in the Jones well in  Colorado.  Both have been
successful oil and gas producers.  The Company sold its interest in the Anderson
State well in North Dakota and in the Taylor-Ina field in Medina County,  Texas.
Overall, this increased the Company's cash reserves to approximately $200,000 by
the end of 1996.  The Company is actively  seeking  additional oil and gas wells
with a portion of this cash.

      In 1995,  the  Company  purchased  a working  interest  in the Ash Unit in
Campbell County, Wyoming. This is a pooled field which has operating costs equal
to about one-half of the net revenue.  The Company invested  primarily in a note
secured  by a coal  mine in 1995 and thus  purchased  less oil and  natural  gas
leases.

      In 1994, the company  purchased  small working  interests in a gas well in
New  Mexico;  a gas  well in  Alabama;  an oil  well in  Montana,  a gas well in
Oklahoma; and a waterflood in Wyoming in which the Company already had a working
interest.  The  Company  spent  an  aggregate  of less  than  $25,000  on  these
purchases.  In 1993,  the Company  sold its  working  interest in the five wells
which it had purchased in 1992 in Frio County,  Texas. It determined these wells
were not  profitable  and were  sold for  salvage  value.  The  company  did not
participate  in any other  drilling in 1993,  and did not  purchase  any further
working interests, but received a royalty interest on four new wells.

      Except for  purchasing  a small  interest  in the  drilling of one well in
1991, and another in 1995, the Company has not engaged in drilling activity. The
Company  has  participated,  in the last few  years,  in the  reworking  of four
existing wells, three in Utah and one in North Dakota. The Company  participates
in new wells  drilled by other  operators as a royalty  owner.  A royalty  owner
generally  receives  a smaller  interest,  but does not share in the  expense of
drilling or operating  the wells.  In 1997,  the Company was not involved in any
current drilling  activity,  by may participate in drilling  ventures during the
next fiscal year.

                           ESTIMATED PROVED RESERVES,
                    FUTURE NET REVENUES AND PRESENT VALUES

      The Company's  interests in proved  developed and  undeveloped oil and gas
properties  have been  evaluated  by  management  for the  fiscal  years  ending
December 31, 1997,  1996,  and 1995.  All of the Company's  revenues are located
within the  continental  United  States.  The  following  table  summarizes  the
Company's  estimate of proved oil and gas reserves at December  31, 1997,  1996,
and 1995.

                                Reserve Category
12/31   Oil (Bbls)  Gas (Mcf)   Oil (Bbls)     Gas(Mcf)    Oil (Bbls)  Gas (Mcf)

19      53,508      204,865     17,047         13,111      70,555      217,976
1996    38,101      265,748     13,011          9,376      51,012      275,124
1997    39,339      301,343     12,612         13,423      51,951      314,766

(1)   The Company sold oil reserves in 1996.

      The estimated  future net reserves (using December 31 prices and costs for
each respective  year), and the present value of future revenues  (discounted at
10%);  for the company's  proved  developed and proved  undeveloped  oil and gas
reserves,  for the years ended December 31, 1995,  1996, and 1997 are summarized
as follows:

      Proved Developed              Proved Undeveloped            Total
                 Present                   Present                   Present
      Future     Value of       Future     Value of      Future      Value of
As of Net        Future Net     Net        Future Net    Net         Future Net
1995  $866,034   $539,782       $246,791   $196,504    $1,112,824    $736,287
1996  $942,653   $574,473       $238,347   $191,527    $1,181,000    $766,000
1997  $970,392   $629,784       $199,701   $129,606    $1,170,093    $759,390

      "Proved  developed"  oil and  gas  reserves  that  can be  expected  to be
recovered  from existing  wells with existing  equipment and operating  methods.
"Proved  undeveloped"  oil and gas reserves are reserves that are expected to be
recovered  from new wells on undrilled  acreage,  or from existing wells where a
relative major expenditure is required for recompletion.

      For  additional   information   concerning  oil  and  gas  reserves,   see
Supplemental  Information - Disclosures About Oil and Gas Producing Activities -
Unaudited, included with the Financial
Statements filed as a part of this report.

      Since  December 31, 1996, the Company's has not filed any estimates of its
oil and gas reserves with,  nor were any such estimates  included in any reports
to, any state or federal  authority  or agency,  other than the  Securities  and
Exchange Commission.

                               Oil and Gas Acreage

      During the last five fiscal years,  the Company  decreased its holdings in
undeveloped oil and gas leases and generally  retained its holdings in developed
oil and gas leases.  The Company's acreage position was relatively static during
the fiscal years ending December 31, 1995, 1996, and 1997.

      "Developed  acreage"  consists of lease  acreage  spaced or  assignable to
production  on wells  having  been  drilled or  completed  to a point that would
permit  production of commercial  quantities of oil or gas.  "Gross  acreage" is
defined as total acres in which the Company has any  interest;  "Net acreage" is
the  actual  number of  mineral  acres in which the  mineral  interest  is owned
entirely by the Company. All developed acreage is held by production.

      The  acreage is  concentrated  in Utah,  Texas,  Oklahoma,  Michigan,  and
Alabama and is widely dispersed in Colorado,  Montana, New Mexico, North Dakota,
an Wyoming.

                    COMPANY'S INTEREST IN PRODUCTIVE WELLS
                                 (Gross and Net)

      The following table shows the Company's interest in productive wells as of
December 31, 1997.

                  Oil Wells (1)                 Gas Wells (2)
                  Gross      Net                Gross       Net
                  212        1.87               35           .9

(1) Primarily located in the  Bluebell-Altamont  field in Northeastern  Utah;
      These  wells include some natural gas production, but are primarily oil 
      wells.

(2) Primarily located in Rio Blanco and LaPlata counties,  Colorado,  Beaver 
      County,  Oklahoma, San Juan county, New Mexico, Otsego County,  Michigan,
      and Duchesne and Uintah Counties, Utah.

                        HISTORICAL PRODUCTION TO COMPANY

      The following  table shows  approximate  net  production to the Company of
crude oil and natural gas for the years ended December 31, 1995, 1996, and 1997:

                                  Crude Oil         Natural Gas
                                  (Barrels)         (Thousands of Cubic Feet)
                                                    MCF
Year Ended December 31, 1995:         8,278         35,250
Year Ended December 31, 1996:         5,886         44,938
Year Ended December 31, 1997:         5,295         46,222

      There are no delivery  commitments with respect to the above production of
oil and  natural  gas,  except  on wells  in which  the  Company  has a  royalty
interest.   The  Company  is  unaware  of  the  circumstances  of  any  delivery
commitments on royalty wells.

               AVERAGE SALES PRICE AND COSTS BY GEOGRAPHIC AREA

      The following table shows the  approximate  average sales price per barrel
(oil) and Mcf (1000 cubic feet of natural gas),  together with production  costs
for units of production for the Company's  production  revenues for 1995,  1996,
and 1997.

                                                 1995        1996        1997
Average sales price per bbl of oil              $15.62      $20.38     $18.55
Average production cost per bbl                 $ 4.70      $ 5.90     $ 4.24
Average sales price per Mcf of natural gas      $ 1.40      $ 1.86     $ 2.03
Average production cost per Mcf of natural gas  $  .47      $  .51     $  .40

      The average  production  cost for oil was lower in 1997,  when compared to
1996,  $4.24 per barrel in 1997 and $5.90 per barrel in 1996.  The  Company  had
less  workovers  on its oil  wells in 1997,  and more  production  from low cost
wells. In 1996, there were more workovers,  as well as more production taxes due
to higher oil prices.

      The average  production  cost for  natural  gas dropped in 1997,  due to a
large  amount of  royalty  gas from San Juan  County,  New  Mexico.  The cost of
production  for  natural gas was $.40 in 1997,  $.51 in 1996,  and $.47 in 1995.
This was  caused by  increased  sales of  natural  gas but with more  production
coming from royalty wells, resulting in a lower price per MCF.

      This Company's oil and gas operations are conducted by the Company through
its corporate headquarters in Denver, Colorado.

      (c)   Mining Interests

      The Company has an  indirect  interest in coal leases in Sullivan  County,
Indiana.  These coal leases are security  for a promissory  note owned by Carbon
Opportunities, L.L.C., in which the Company holds a 2% interest. The leases were
operated  as the Buck  Creek  Coal Mine  during  1995,  but have since gone into
bankruptcy  and are currently in a Chapter 11  liquidation.  The Company has not
made any reserve  estimates  of coal in place on such leases as the value of the
leases has been written off. The Company  currently has no mining  operations on
its mineral interests.

      (d)   Corporate Offices and Employees

      The corporate  offices are located at 1675 Broadway,  Suite 1030,  Denver,
Colorado  80202.  The  Company  is not a party to any lease but  currently  pays
$1,600 a month to  Jenex  Operating  Company,  which is  partially  owned by the
Company's president,  for office space and all office services,  including rent,
phone,  office supplies,  secretarial,  land, and geology.  The Company's office
expenses are  approximately  $20,000 per year.  The Company is  continuing  this
arrangement on a month-to-month  basis. The Company believes this arrangement is
below true market rate for equivalent facilities and services.

      The Company  currently  has five (5)  directors.  The Company has one part
time employee, the President,  and two assistant secretaries on a contract basis
employed at the Company's  corporate offices.  None of the officers or employees
are represented by a union.

      (e)   Foreign Operations and Subsidiaries

            The Company has no foreign operations, exports, or subsidiaries.


ITEM 3.     LEGAL PROCEEDINGS

      There are no legal  actions of a material  nature in which the  Company is
engaged.


ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      The Company's 1996 annual meeting was held at the Croff Oil
Company office in Denver, Colorado on November 25, 1997.  The
Company solicited proxies on the following matters, with the
results of the balloting being as follows:
Election of Directors
Gerald L. Jensen                                Approval of Auditors
      For:        269,747                       For:         269,077
      Against:          0                       Against:           0
      Abstain:        100                       Abstain:           0
Richard H. Mandel, Jr.
      For:        269,747
      Against:          0
      Abstain:        100
Dilworth A. Nebeker
      For:        261,929
      Against:      7,818
      Abstain:        100
Edwin Peiker
      For:        269,747
      Against:          0
      Abstain:        100
Julian D. Jensen
      For:        269,747
      Against:          0
      Abstain:        100

                                     PART II


ITEM 5.     MARKET FOR REGISTRANT'S SECURITIES AND RELATED
            STOCKHOLDER MATTERS

      On February  28,  1996,  the  shareholders  approved  the  issuance of the
Preferred  B stock to be issued to each common  shareholder  on the basis of one
share  Preferred  B for each share of common  stock.  The  Company in the fourth
quarter of 1996 issued all of the Preferred Shares and delivered the Preferred B
shares  to each of the  shareholders  for which it had a  current  address.  The
Preferred B shares are restricted and tradable only through a clearinghouse held
by the  Company  from  December  through  February  of each  year.  The  Company
established a bid and ask format,  whereby any shareholder could submit a bid or
ask price for each  Preferred  B share.  During  the first bid and ask period in
1997,  bids of $.75  were  received  and  asked  prices  of $.75 and  $.90  were
received,  and 13.365  Preferred B shares  were  traded at $.75 or $.90.  All of
these transactions are now completed. In 1997-1998,  the bid prices received are
$.90-$1.00  and  approximately  30,000  shares are expected to be traded at this
price.  Because the stock is  restricted  and the Company has agreed to act as a
clearinghouse  for the sales of these Preferred B shares,  the Company is acting
as its own transfer agent, with respect to these Preferred B shares only.

      In  November,  1991,  the Common  Stock was reversed  split,  1:10,  and a
trading range of approximately  $1.00 bid to $1.10 was established and prevailed
for  approximately  four  years.  A  few  transactions  were  conducted  in  the
over-the-counter  market or on the pink sheets,  but the stock was not listed on
any exchange and did not qualify to be listed on the NASDAQ small cap  exchange.
Therefore,  there has been almost no trading in the Company's  securities during
the last five years.  The Company has purchased  common stock on an  unsolicited
basis during this period at a price of $1.00-$1.20 per share and certain limited
transactions  known to the Company were traded within this same range. The chart
below  shows the  trading of which the  Company  is aware  during the last three
years.

      The trading range for  1997-1998 is shown for Preferred  shares and common
shares as a guide to the shareholders as to what  transactions have either taken
place or of which  the  Company  is  aware of the bid or ask  price.  One of the
principal reasons for issuance of the Preferred B shares,  was to attempt to use
the common shares of the Company to grow the Company to a size whereby an active
trading market will develop.

                   COMMON SHARES - 516,315 SHARES OUTSTANDING
                             BID RANGE (1), (2), (3), (4)
            Calendar Quarter                      Bid               Asked
      1995: First Quarter                        $1.00              $1.10
            Second Quarter                       $1.00              $1.10
            Third Quarter                        $1.00              $1.10
            Fourth Quarter                       $1.10              $1.20
      1996: First Quarter                        $1.10              $1.20
            Second Quarter                       $1.10              $1.20
            Third Quarter                        $1.10              $1.20
            Fourth Quarter                       $1.10              $1.20
      1997: First Quarter                        $ .50 (4)          $ .75 (4)
            Second Quarter                       $ .50 (4)          $ .75 (4)
            Third Quarter                        $ .50 (4)          $ .75 (4)
            Fourth Quarter                       $ .50 (4)          $ .75 (4)
      1998: First Quarter                        $ .65 (4)          $ .75 (4)

(1) Only a few  transactions  resulting in the transfer of stock took 
      place in 1995, 1996 or 1997.
(2) In 1991,  the Company  tendered for its own 1:10  reverse  split 
      shares at  $1.00 per share net to the  shareholder.  Approximately
      29,000  Shares were  purchased by the  Company.  All prices  shown
      are following  the implementation of the reverse split.
      (3)   TheCompany  repurchased   approximately  10,000  of  its  shares  
            for  its Treasury  in 1995 at $1.00 and $1.05  per  share  from an
            estate  and a bankruptcy trustee.
(3) Therestricted  Preferred B shares were first issued in 1996,  and 
      trade in a Company sponsored  clearinghouse from December-February
      of each year, so the 1997 and prices  subsequent  reflect  the 
      common  share price to which the Preferred B price must be added 
      to compare earlier periods.

      As of December 31, 1997, there were approximately  1,100 holders of record
of the Company's  common stock. The Company has never paid a dividend and has no
present plan to pay any dividend.

                PREFERRED "B" SHARES-  516,315 SHARES  OUTSTANDING
                       BID RANGE (1), (2), (3), (4)
            Calendar Quarter                Bid                  Asked
      1997: First Quarter                   $.75-$.90            $.90
            Second Quarter                  No Trading           No Trading
            Third Quarter                   No Trading           No Trading
            Fourth Quarter                  $.75-$.90            $1.00
      1998: First Quarter                   $.90                 $1.00



ITEM 6.     SELECTED FINANCIAL DATA

Fiscal Year Ended December 31:
                      1993        1994        1995        1996        1997
REVENUES
Operations
  Oil and Gas         $201,182    $196,780    $195,834    $216,870    $193.099
  Other Revenues      $  7,606    $  6,139    $  9,596    $ 27,181    $ 14,790
Expenses              $166,854    $167,080    $173,919    $170,258    $220.627
  Net Income          $ 42,579    $ 34,183    $ 31,511    $ 73,793    $(12,738)
  Per Common Share    $    .08    $    .06    $    .06    $    .14    $   (.12)
Working capital       $ 74,934    $ 74,401    $ 26,457    $226,367    $205,339
Long-term debt              --          --          --          --          --
Total assets          $402,414    $430,327    $505,018    $515,704    $504,875
Stockholders' equity  $384,673    $418,856    $440,527    $510,880    $497,892
Dividends per share     NONE        NONE        NONE        NONE        NONE



ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITIONS AND RESULTS OF OPERATIONS

      (a)   Results of Operations

      Oil and gas sales for the fiscal year ended  December 31, 1997,  decreased
from  $216,870 in 1996 to $193,099 in 1997.  This  decrease was due to the steep
decline in oil prices.  Natural gas sales  increased  primarily  from  increased
sales from coal seam gas in New Mexico.  Oil sales  decreased due to the natural
decline in the fields.  Production  purchases  and new  drilling  may  partially
offset this decline when it comes on stream in 1998.  However,  the drastic drop
in oil prices from one year ago is sure to decrease  revenues  from existing oil
production significantly in 1998.

      Oil and gas sales for the fiscal year ended  December 31, 1996,  increased
from $195,834 in 1995 to $216,870 in 1996.  This was caused by several  factors,
natural gas production from coal seam gas increased,  the price of oil reached a
three year high, and production  from purchased oil wells was added.  Oil prices
in 1996  benefited  from a cold winter that caused  heating oil to rise carrying
crude prices  upward.  Then prices  firmed up at the higher levels and increased
again at the end of the  year.  The  shortage  of oil in  Western  Colorado  and
Eastern  Utah  resulted  in a premium  price for much of this oil.  Natural  gas
prices benefited from the cold winter which drew down storage levels.  An actual
or perceived  shortage of natural gas during November,  1996,  through February,
1997,  resulted in a price level of $3-$4 per MCF by early 1998. Natural gas has
risen to over 45% of total oil and gas  revenues  and oil  revenues are now less
than 55%.

      Oil prices in 1995 rose, then fell, then rose again at the end of the year
resulting in an overall  increase of about $1.00 per barrel.  Natural gas prices
were lower  during the first  half of 1995,  and then began to rise.  During the
last half of the year,  natural  gas prices  rose from  around  $1.20 per MCF to
about $1.70 per MCF.  Because some of Croff's  natural gas  production  has been
locked in at higher prices due to previous contracts,  only a portion of Croff's
natural  gas  production  benefited  because of this  increase.  The natural gas
production  for Croff was higher  with the  increase  in coal seam gas which has
been a lower priced product.

      Operating expenses  including  production taxes, in the fiscal year ending
December 31, 1997,  were $40,824  compared to $58,556 in 1996. This decrease was
due to less workover  expenses in 1997,  the sale of higher cost wells,  and the
purchase of natural gas wells,  which have lease operating  expenses,  at better
prices  than  royalty  interests,  which  do not  have  operating  expenses,  so
management  expects lease operating  expenses to increase with more  production.
Currently production increases were being offset by lower prices.

      Operating  costs  increased from $55,584 in 1995 to $58,356 in 1996.  This
increase in lease operating expenses was due to higher costs in some of the Utah
fields where Coastal completed workovers on wells acquired from Linmar Petroleum
Company.  The overall strategy of the Company in using its cash flow to purchase
interests in oil and gas properties  has resulted in gradual  increases in total
oil and gas  production.  The  Company  has  attempted  to sell or  abandon  its
interest in wells with high operational costs, as a percent of revenues.

      General administration  expenses increased from $73,673 in 1996 to $79,495
in 1997.  The principal  reason for this increase was a raise of $6,000 per year
to the  President.  The  President's  salary had not been  increased in over ten
years and the Board of  Directors  raised it,  effective  April 1,  1997.  Other
income  increased due to interest on cash and dividends on stock and lease bonus
income.

      General and  administrative  expenses  increased  in the fiscal year ended
December 31, 1996,  to $73,673 from $66,698 in 1995.  This increase was due to a
higher  legal,  accounting  and  administrative  expense  incurred in designing,
authorizing  and delivering the new capital  structure of the Company  including
the  Preferred B shares which were issued in 1996.  Other income also  increased
due to higher  interest being paid on the Company's  higher cash  balances,  and
profits on sales of oil and gas properties.

      General and  administrative  costs  varied  little in 1995 at $66,698 from
$65,815 in 1994. There was no shareholders  meeting in 1994 and the shareholders
meeting in 1995 involved a reorganization  of the Company.  There were increased
accounting and legal costs incurred as part of the proposed reorganization.  The
Company's  other  income  in 1995 was the  result of the sale of an oil well and
interest on cash and liquid assets.

      (b)   Capital Resources and Liquidity

      At December 31, 1997, the Company's  current  assets totaled  $212,322 and
the Company's current liabilities totaled $6,983, for a working capital position
of $205,339.  The Company has maintained  approximately this liquid position for
the last two years. This liquidity decreased from $231,191 at December 31, 1996,
to the  $205,339 at December  31,  1997.  This  decrease  was due to the Company
purchasing  oil and gas wells during 1997.  The Company is currently  seeking to
acquire a group of gas wells which will decrease its liquidity considerably. The
Company's  current  ratio is still in  excess  of 30:1.  The  management  of the
Company  has  determined  that it is  advantageous  to  maintain  a more  liquid
position during the time it seeks to reach a reverse acquisition with respect to
the Company.  In the meantime,  the Company continues to seek to buy oil and gas
properties.

      In 1996, the Company increased its current ratio by decreasing its current
liabilities  from  $64,491 to $4,824,  while  increasing  its current  assets to
$231,191.  In 1996,  the Company's  current ratio  increased as it paid off bank
debt and paid down payables and utilized its cash flow to accumulate cash.

       The Company increased its current assets in 1995 to $90,948. However, its
current  liabilities  increased  from $11,471 to $64,491 due to investing in the
promissory  note  secured by the coal mine in Indiana.  The Company  accumulated
cash in order to pay off this note,  which was paid off on March 1,  1996.  Thus
while  the  current  ratio  of the  Company  at the end of  December,  1995  was
approximately 3:2, the current ratio in early 1996, was approximately 3:1.

      The Company  continues to enjoy a positive  cash flow that it will utilize
to invest.  Because of the recent  reorganization  of the  Company,  the Company
intends to use its cash flow for oil and gas purchases. The Company would expect
that future cash  positions and liquidity  will be dependent upon its success in
doing a merger, or reverse acquisition, and the amount of oil and gas properties
it buys.

      Because the Company's revenues are primarily from royalty payments and the
Company does not have significant operating expenses,  inflation is favorable to
the Company.


I
TEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      See index to financial  statements,  financial  statement  schedules,  and
supplemental information, beginning with Page 22 (F-1) hereof.


ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
            ACCOUNTING AND FINANCIAL DISCLOSURE

      None.


                                    PART III


ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      (a)(b)(c)   Identification of Directors, Officer and
Significant Employees.

      The Croff Board consists of Gerald L. Jensen, Dilworth A.
Nebeker, Richard H. Mandel, Edwin W. Peiker, and Julian D.
Jensen.  Each director will serve until the next annual meeting
of shareholders, or until his successor is duly elected and
qualified.  The following is provided with respect to each
officer and director of the Company as of March 1, 1998.

GERALD L. JENSEN, 58, PRESIDENT AND DIRECTOR
      President of Croff Oil Company since October, 1985.  Prior
      to this date, Mr. Jensen was Chairman of Petro-Silver,
      Inc., a public company, for over five years.  Mr. Jensen
      was a director of Pyro Energy Corp., a public company
      engaged primarily in coal production, from 1978 until the
      Company was sold in 1989.  Mr. Jensen is also an owner of
      private real estate, development, and oil and gas companies.

RICHARD H. MANDEL, JR., 68, DIRECTOR
      Since 1982,  Mr. Mandel has been  President and a Board Member of American
      Western Group, Inc., an oil and gas producing company in Denver, Colorado.
      From 1977 to 1984,  he was President of Universal  Drilling  Co.,  Denver,
      Colorado.  Since July,  1994,  he has been a Board Member of Wichita River
      Oil Company.

DILWORTH A. NEBEKER, 57, DIRECTOR
      Mr.  Nebeker  served as President of Croff from  September 2, 1983 to June
      24, 1985,  and has been a director of Croff since  December,  1981. He has
      been a lawyer in private  practice for the past ten years.  Prior thereto,
      he was a lawyer employed by Tosco Corporation, a public corporation,  from
      1973 to 1978. He was a lawyer with the Securities and Exchange  Commission
      from 1967 to 1973.

EDWIN W. PEIKER, JR., 66, DIRECTOR AND SECRETARY
      Mr. Peiker was President of Royal Gold, Inc., from 1988
      through 1991, and continues to be a director.  Since 1986,
      Mr. Peiker has been a Vice President and Director of Royal
      Gold, Inc., a public company engaged in gold exploration
      and mining activities.  Prior thereto he was involved in
      private investments in oil and gas exploration and
      production.  Mr. Peiker was employed in responsible
      positions with AMAX, Inc., a public corporation, from 1963
      to 1983.  AMAX is primarily engaged in mine evaluation and
      resource analysis.

JULIAN D. JENSEN, 49, DIRECTOR
      Mr. Jensen is the brother of the Company's president and
      has served as legal counsel to the Company for the past
      seven years.  Mr. Jensen has practiced law, primarily in
      the areas of corporate and securities law, in Salt Lake
      City, Utah, since 1975.  Mr. Jensen is currently associated
      with the firm of Jensen, Duffin, Carman, Dibb & Jackson,
      which acts as legal counsel for the Company.

      The Company has no knowledge of any arrangements or understandings between
directors  or any other  person  pursuant  to which any  person  was or is to be
nominated or elected to the office of director of the Company.


ITEM 11     EXECUTIVE COMPENSATION

      (a)   Remuneration

      During the fiscal year ended December 31, 1997, there were no  officers, 
 employees  or  directors  whose total cash or other  remuneration exceeded 
$60,000.

                           Summary Compensation Table
                         1997 Compensation of C.E.O. (1)
                                                                       Total All
     Salary        Bonus         Other         Stock Options        Compensation

     $52,500       0             0             0                    $52500
      per annum

(1)   Gerald L. Jensen is employed part time as the President and
   C.E.O. of Croff Enterprises, Inc.

      Effective March 20, 1997, the President's  salary was increased to $54,000
per year. In addition,  the Company will contribute 3% of his salary to a Simple
IRA Plan.

      Directors,  excluding  the  President,  are not paid a set  salary  by the
Company,  but are paid $350 for each  half-day  board  meeting and $500 for each
full-day  board  meeting.  The  increased  compensation  for the  directors  was
approved  at the  Board of  Directors  meeting  held on March  20,  1997,  to be
effective immediately.

      (b)   Proposed Remuneration

      During the current fiscal year, the Company intends to compensate  outside
directors  at the rate of $350 for a half  day  meeting  and $500 for a full day
meeting.

      Based on the current remuneration, for the fiscal year ending December 31,
1997, no officer or director shall receive total cash  remuneration in excess of
$60,000.

      (c)   Options, Warrants or Rights

      Directors  were  authorized  and  issued  stock  warrants  in  1991,  that
essentially  provide each  director a warrant to purchase  10,000  shares of the
Company's stock at $1.00 per share through 1995. The President's  warrant is for
20,000 shares.  The warrants to purchase stock were extended for four more years
at the Board of Directors  meeting on November 1, 1995. The  expiration  date of
the warrants is December 31, 1999.  No stock  options were granted in the fiscal
year ending December 31, 1997.

      The chart below sets out the terms and value of the above  warrants to all
officers and directors, none of which have been exercised.


           Officers and Directors Warrants and Compensation (1997)

          Warrant to    Termination  Exercise  Current Value  Director
          Buy           Date         Price    (Estimated) (1) Compensation
Directors excluding
President:10,000 Shares 12/31/99     $1.00     $ 7,500        $  4,200

President:20,000 Shares 12/31/99     $1.00     $15,000        $54,000 as Pres.

(1) Based on a current  stock  price of $1.00 for  Preferred  B shares  and $.75
    for common  shares for a total  estimated  value of $1.75,  over option
    price of $1.00 per share. There is no market for the warrants and an 
    extremely limited market for stock.


ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
            AND MANAGEMENT

      (a)(b)   Security Ownership of Certain Beneficial Owners and
               Management

      The following table sets forth the beneficial ownership of Common stock of
the Company as of December 31, 1997, by (a) each person who owned of record,  or
beneficially, more than five percent (5%) of the Company's $.10 par value common
stock, its only class of outstanding  voting  securities,  and (b) each director
and nominee and all directors and officers as a group.


                                          Shares                   Percentage of
                                          Beneficially             Class of
                                          Owned                    Stock
Jensen Development Company                132,130 (1)              25.58%
      1675 Broadway, Suite 1030
      Denver, Colorado 80202
Gerald L. Jensen                           71,215 (2)              13.27%
      1675 Broadway, Suite 1030
      Denver, Colorado 80202
Edwin W. Peiker, Jr.                       14,000 (2)               2.66%
      550 Ord Drive
      Boulder, Colorado 80401
Dilworth A. Nebeker                        11,300 (2)               2.15%
      201 East Figueroa Street
      Santa Barbara, California 93101
Richard H. Mandel, Jr.                     10,100 (2)               1.92%
      3333 E. Florida #94
      Denver, Colorado 80210
Julian D. Jensen                           46,532 (2)(3)            8.84%
      311 South State Street, Suite 380
      Salt Lake City, Utah 84111
Directors as a Group                       285,277                 49.48%

(1)   Jensen Development Company is wholly owned by Gerald L. Jensen

(2)   Includes a warrant to purchase 10,000 shares of the Company's
      stock at $1.00 per share, expiring December 31, 1999.  Mr.
      Gerald L. Jensen's warrant is for 20,000 shares.  None of the
      warrants have been exercised.

(3)   Includes shares held in Jensen Family Trust (31,532) in which
      Julian D. Jensen is the Trustee and approximate 43%
      beneficial owner.  Mr. Gerald L. Jensen holds an approximate
      38% beneficial interest in these Trusts.


ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The  Company  currently  is in an office  sharing  arrangement  with Jenex
Corporation,  hereafter  "Jenex",  a company in which the  President,  Gerald L.
Jensen, is a 50% shareholder.  Jenex provides offices,  phones, office supplies,
computers,  photocopier,  fax, and all normal and customary office services.  In
addition, the Company shares an accountant and two assistant secretaries who are
paid by Jenex. Jenex also provides assistance from a geologist.  Croff currently
reimburses  Jenex  $1,600  per  month  for all of these  expenses.  This fee was
increased from $1,400 to $1,600 to be retroactively  effective  October 1, 1997,
by approval of the  Directors  at the Board  meeting  held on November 25, 1997.
These arrangements were entered into in order to reduce the Company's  overhead.
The Company is currently continuing this arrangement on a month-to-month  basis.
In the  opinion  of  management,  the  amounts  paid by Croff  to Jenex  for the
personnel, office, equipment use, and other services are below the cost for such
items if independently obtained.

      The Company retains the legal services of Jensen,  Duffin,  Carman, Dibb &
Jackson.  Julian Jensen, a director, as a professional  corporation,  is part of
this  association.  Legal fees paid to this law firm for the years  ending 1997,
1996, and 1995 are, respectively, $2,086, $4,398, and $2,222.


ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
            ON FORM 8-K

      (a)(1) Financial Statements. See index to financial statements,  financial
         statement schedules, and supplemental information as referenced in Part
         II, Item 8, and the financial  index on Page F-1 hereof.  These reports
         are attached as Exhibits and are incorporated herein.

      (b)   Reports on Form 8-K

      None

      (c)   Exhibit Index


      I.     Report of Independent Certified Public Accountants

      II.    Proxy Statement for Meeting on November 25, 1997.

      III.   Question and Answer Sheet for Shareholders on Preferred B
             Shares

      IV.    Copy of Preferred B Certificate




<PAGE>



                                   SIGNATURES


      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
behalf by the undersigned, thereunto duly authorized.


                                          REGISTRANT:

                                          CROFF ENTERPRISES, INC.


Date: March 31, 1998                      By: /S/Gerald L. Jensen
                                          Gerald L. Jensen, President,
                                          Chief Executive Officer

Date: March 31, 1998                      By: /S/ Beverly Licholat

                                          Beverly Licholat,
                                          Chief Financial Officer


      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the date indicated.


Date: March 31, 1998                      By: /S/Gerald L. Jensen
                                          Gerald L. Jensen, President

Date: March 31, 1998                      By: /S/ Richard H. Mandel
                                          Richard H. Mandel, Jr., Director


Date: March 31, 1998                      By: /S/ Edwin Peiker
                                          Edwin Peiker, Jr., Director


Date: March 31, 1998                      By: /S/ Dilworth A. Nebeker
                                          Dilworth A. Nebeker, Director


Date: March 31, 1998                      By: /S/ Julian D. Jensen
                                          Julian D. Jensen, Director


<PAGE>
                                 PROXY STATEMENT
                             CROFF ENTERPRISES, INC.
                       1997 ANNUAL MEETING OF SHAREHOLDERS
                                November 25, 1997

      THIS  PROXY  STATEMENT  IS BEING  MAILED  TO  SHAREHOLDERS  OF  RECORD  IN
CONNECTION  WITH THE  SOLICITATION  OF THEIR VOTE BY THE BOARD OF  DIRECTORS  OF
CROFF OIL COMPANY (the Company) with regard to the Annual  Meeting to be held on
November 25, 1997 at 10:00 a.m. at 1675 Broadway,  Suite 1030, Denver,  Colorado
80202,  Telephone:  (303) 628-1963.  This Proxy Statement  should be reviewed in
connection  with the enclosed copy of the Annual Reported filed on SEC Form 10-K
dated  December 31, 1996,  and the most recent  Statement of Operations  for the
quarter ending June 30, 1997.
      VARIOUS  ITEMS OF IMPORTANT  INFORMATION  AND  ACCOUNTING  FOR THE COMPANY
RELATED TO THIS PROXY  STATEMENT  ARE SET-OUT IN THE ENCLOSED  ANNUAL  REPORT ON
FORM 10-K OR THE MOST RECENT STATEMENT OF OPERATIONS.  SUCH DETAILED INFORMATION
MAY BE RELEVANT IN REVIEWING THIS PROXY  STATEMENT,  BUT IS NOT REPEATED IN THIS
DOCUMENT. ACCORDINGLY, EACH SHAREHOLDER SHOULD REFER TO THE FORM 10-K AND RECENT
QUARTERLY FINANCIAL INFORMATION BEFORE COMPLETING THEIR PROXY BALLOT.
      Proxies voted in accordance  with the  accompanying  ballot form which are
properly  executed  and received by the  Secretary  to the Company  prior to the
Annual Meeting will be voted.
                              Revocability of Proxy
      A shareholder  returning the enclosed proxy ballot has the power to revoke
it at any time  before it is  exercised  and may do so by written  notice to the
Secretary of the Company at the address set forth above,  effective upon receipt
of such written notice, or by voting in person at the Annual Meeting. Attendance
at the Annual  Meeting,  in and of itself,  will not constitute  revocation of a
proxy.
                                Voting Securities
      The record date for the determination of shareholders  entitled to vote at
the Annual  Meeting is the close of  business on October  10,  1997.  There were
issued,  outstanding  and  entitled to vote on such date  approximately  516,515
shares of the 20,000,000 authorized shares. The Company has authorized 5,000,000
shares of Class "A" preferred  non-voting stock,  none of which are issued;  and
520,000  shares of Class "B"  preferred  non-voting  stock of which  516,500 are
presently issued and  outstanding.  The Company has only the one class of Common
Shares,  each of  which is  entitled  to one  vote.  The  Company  does not have
cumulative voting.  Accordingly,  each shareholder may vote all of his shares on
each  separate  ballot  proposal.  The Company will bear all costs of this proxy
solicitation.
      Shares  entitled  to vote  will be  determined  based  upon  the  official
shareholder  record of October 10, 1997. Actual votes cast will be determined by
the physical  counting of votes in person or proxy by the inspector of elections
to be appointed  prior to the meeting by the Board of Directors.  Any dispute as
to votes or entitlement to vote will be decided by majority vote of the Board of
Directors.  Abstentions  and broker  non-votes  will not be  counted  for either
quorum or ballot purposes.
      As to each item to be voted upon in this Proxy,  a  numerical  majority of
the issued and outstanding shares must be present, in person or by proxy, at the
meeting.  This means the shares required for a quorum will equal 258,259 shares.
Each proposal to be voted upon will only be adopted by a majority vote of shares
voted at the meeting,  provided a quorum is present.  That is, each item will be
adopted by an  affirmative  vote of not less than 129,130  shares,  or a greater
majority of those shares as otherwise determined by the inspector of elections.
      There are no  matters  to be voted  upon as  described  by this Proxy upon
which management will proceed absent majority  shareholder approval as described
above.
      The Company knows of no person or group, except the
following, which, as of the date of this Proxy Statement,
beneficially owns and has the right to vote more than 5% of the
Company's Common Stock:
Names and Address of Beneficial Owner           Shares Beneficially Owned
Percent of Class
Jensen Development Company (1)                  132,130
   25.58%
      1675 Broadway, Suite 1030
      Denver, Colorado 80202
Gerald L. Jensen (2)                        71,215
   13.27%
Julian D. Jensen (2)&(3)                    46,532
   8.84%
      Jensen Revocable Trust
4.   Directors as a Group (2)                   285,277
49.48%
Jensen Development Company is wholly by Gerald L. Jensen.
Includes warrants to purchase 10,000 shares of the Company's
   stock by each director at $1.00 per share, expiring December
   31, 1998.  Mr. Gerald L. Jensen's warrant is for 20,000
   shares.  None of the warrants have been exercised.
Mr. Julian D. Jensen owns 5,000 shares directly and holds a
   warrant for 10,000 shares (see Note 2, above); 21,432 are
   held by him as the Trustee of the Jensen Family Trust and
   10,000 as the Trustee of the Jensen Revocable Trust.  Mr.
   Julian D. Jensen has an approximate 43% beneficial interest
   in these Trusts and Mr. Gerald L. Jensen has an approximate
   38% beneficial interest.

                       MATTERS SUBJECT TO SHAREHOLDER VOTE
                                       I.
                              Election of Directors
      The Croff Board consists of Gerald L. Jensen, Dilworth A.
Nebeker, Richard H. Mandel, Jr., Edwin W. Peiker, Jr., and
Julian D. Jensen.  Each director will serve until the next
annual meeting of shareholders, or until his successor is duly
elected and qualified.  Mr. Gerald L. Jensen is the only inside
director, who also serves as President of the Company. The
following information is provided with respect to each officer
and director of the Company who are current nominees for
re-election.  Management solicits your vote in favor of each of the
following current members of the Board of Directors:
GERALD L. JENSEN, 57, PRESIDENT AND DIRECTOR
      President of Croff Oil Company on a part-time basis since
      October, 1985.  Prior to this date, Mr. Jensen was Chairman
      of Petro-Silver, Inc., a public company, for over five
      years.  Mr. Jensen was a director of Pyro Energy Corp., a
      public company engaged primarily in coal production from
      1978 until the company was sold in 1989.  Mr. Jensen is
      also an owner of private real estate, development, and oil
      and gas companies.
RICHARD H. MANDEL, JR., 67, DIRECTOR
      Since 1982,  Mr. Mandel has been  President and a Board Member of American
      Western Group, Inc., an oil and gas producing company in Denver, Colorado.
      He is President  and also a Board Member of Richard H. Mandel,  Ltd.,  and
      oil and gas production company in Denver,  Colorado. From 1977 to 1984, he
      was President of Universal  Drilling  Co.,  Denver,  Colorado.  Since May,
      1988, he has been a Board Member of Richmond  Exploration  Company.  Since
      July, 1990, he has been a Board Member of Pacific Petroleum,  Ltd., an OTC
      Nevada Company.
DILWORTH A. NEBEKER, 56, DIRECTOR
      Mr.  Nebeker  served as President of Croff from  September 2, 1983 to June
      24, 1985,  and has been a director of Croff since  December,  1981. He has
      been a lawyer in private practice for the past seven years. Prior thereto,
      he was a lawyer employed by Tosco Corporation, a public corporation,  from
      1973 to 1978. He was a lawyer with the Securities and Exchange  Commission
      from 1967 to 1973.
EDWIN W. PEIKER, JR., 62, DIRECTOR AND SECRETARY
      Mr. Peiker was President of Royal Gold, Inc., from 1988
      through 1991, and continues to be a director.  Since 1986,
      Mr. Peiker has been a Vice President and Director of Royal
      Gold, Inc., a public company engaged in gold exploration
      and mining activities.  Prior thereto he was involved in
      private investments in oil and gas exploration and
      production.  Mr. Peiker was employed in responsible
      positions with AMAX, Inc., a public corporation, from 1963
      to 1983.  AMAX is primarily engaged in mine evaluation and
      resource analysis.
JULIAN D. JENSEN, 49, DIRECTOR
      Mr. Jensen is the brother of the Company's president and
      has served as legal counsel to the Company for the past
      seven years.  Mr. Jensen has practiced law, primarily in
      the areas of corporate and securities law, in Salt Lake
      City, Utah, since 1975.  Mr. Jensen is currently associated
      with the firm of Jensen, Duffin, Carman, Dibb & Jackson,
      which acts as legal counsel for the Company.
                       SUMMARY INFORMATION AS TO DIRECTORS
                                          Number of Shares
Percentage of Issued
Name              Director Since          Compensation      (Beneficial &
Legal)      and Outstanding
GERALD L. JENSEN(1)     1985        Salary as               203,345
38.13%
                              President:        (See Principal
                              $54,000 -         Shareholder Chart,
                              Including   above)
                              simple IRA
                              plan-No
                              Director
                              Compensation
                                   (See Below)
DILWORTH A. NEBEKER   1981          Normal            11,300
2.11%
Director                      Director
                                  Stipend Only
                                   (See Below)
RICHARD MANDEL (2)       1985       Normal                  10,100
1.88%
                                    Director
                                  Stipend Only
                                   (See Below)
EDWIN PEIKER, JR. (2)        1985         Normal                  14,000
2.61%
                                    Director
                                  Stipend Only
                                   (See Below)
JULIAN D. JENSEN (2)&(3)  1990            Normal            46,532
8.68%
                              Director         (See Principal
                              Stipend Only           Shareholder Chart,
                              (See Below)            (above)
Includes shares held by Jensen Development Corporation (132,130) as wholly owned
   by Gerald L. Jensen.  Effective  March 20, 1997, the  President's  salary was
   increased $6,000 per year. In addition,  the Company annually  contributes 3%
   of his salary to a simple IRA plan.
Includes warrant  expiring  December 31, 1999, to acquire  10,000 shares by each
   Director,  except Gerald L. Jensen, who holds a warrant for 20,000 shares. No
   warrant has been exercised to date. Warrants may be extended by majority vote
   of the Board.
Includes shares held in Jensen Family Trust (21,432) and Jensen  Revocable Trust
   (10,000) in which Julian D. Jensen is the sole Trustee and an approximate 43%
   beneficial  owner.  Mr. Gerald L. Jensen holds an approximate  38% beneficial
   interest in these Trusts.
      Outside  Directors  are paid a per diem fee of $500 for a full day meeting
and $350 for each half-day session of directors meeting  attended,  plus any out
of state  travel  costs.  Directors  receive  no other  compensation  for  their
services,  except the stock options described above. Directors have no liability
insurance coverage.
      Other nominees by Shareholders  may be made and seconded in writing on the
Proxy Ballot or at the meeting in accordance with Standard rules of the meeting.
The Company follows the current edition of the Standard  Robert's Rules of Order
pertaining to nominees and other business conducted at the meeting.
                                       II.
            Ratification of Appointment of Independent Accountants
      The Board of Directors has appointed Causey, Demgen & Moore
as  independent  certified  public  accountants  for the  Company to examine the
financial  statements  of the Company for the fiscal  year ending  December  31,
1998. The  appointment of Causey,  Demgen & Moore is subject to  ratification of
the shareholders and a resolution for such  ratification  will be offered at the
Annual  Meeting as is contained in the enclosed proxy ballot.  Causey,  Demgen &
Moore have been  acting as  independent  accountants  for the  Company for seven
years and, both by virtue of its  familiarity  with the Company's  affairs,  its
lower cost,  and its ability,  is considered  by the Board as best  qualified to
continue its  performance  of these  functions.  The present  Board of Directors
recommends adoption of the resolution retaining the foregoing accounting firm as
independent auditors for the Company. The foregoing  accountants will not have a
representative present at the Annual Meeting but have agreed to respond directly
to any shareholder accounting questions sent to their office at 1801 California,
Suite 4650, Denver, Colorado 80202.
                                  Other Matters
      The  Annual  Meeting is called  for the  purposes  set forth in the notice
thereof. The Board of Directors intends to be present, but has not been informed
that any other person intends to present.  The Board is not aware of any matters
for action at the Annual  Meeting other than those  specifically  referred to in
the  Notice of  Meeting  and this  Proxy  Statement.  If any other  matters  are
properly  brought  before  the  Annual  Meeting,  it is  the  intention  of  the
proxyholders to vote on such matters in accordance with their judgment.
                              Stockholder Proposals
      There were no stockholders  proposals  submitted for  consideration at the
1997 Annual Meeting. Stockholder proposals intended to be considered at the next
Annual  Meeting of  Stockholders  must be  received by The Company no later than
March 31, 1998. Such proposals may be included in next year's proxy statement if
they comply with certain rules and regulations promulgated by the Securities and
Exchange Commission.
                                Financial Reports
      The financial  reports for the Company's  operations  ending  December 31,
1996 as appended to the incorporated 10-K and the most recent Revenue Statements
for the quarter  ending June 30, 1997,  are  considered an integral part of this
Proxy Statement and are incorporated by this reference.  See also, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" at pp.
16-19 of the enclosed 10-K Report which is also incorporated by this reference.

Dated: October 23, 1997.

                                    BY ORDER OF THE BOARD OF DIRECTORS




                                    Gerald L. Jensen



<PAGE>

                             CROFF ENTERPRISES, INC.

                    INDEX TO FINANCIAL STATEMENTS, SCHEDULES
                          AND SUPPLEMENTAL INFORMATION



                                                            Page Number
I.    Financial Statements

      Report of Independent Certified Public Accountants........F-2

      Balance Sheet - December 31, 1996 and 1997................F-3

      Statement of Operations - years ended December 31, 1995,
        1996 and 1997...........................................F-5

      Statement of Stockholders' Equity - years ended
        December 31, 1995, 1996 and 1997........................F-6

      Statement of Cash Flows - years ended December 31,
        1995, 1996 and 1997.....................................F-7

      Notes to Financial Statements.............................F-8

II.   Supplemental Information - Disclosures about Oil and
        Gas Producing Activities - Unaudited...................F-13



                                       F-1



<PAGE>





          REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



Board of Directors and Stockholders
Croff Enterprises, Inc.


We have  audited the balance  sheet of Croff  Enterprises,  Inc. at December 31,
1996 and 1997, and the related  statements of operations,  stockholders'  equity
and cash flows for each of the three  years in the  period  ended  December  31,
1997.  These  financial  statements are the  responsibility  of management.  Our
responsibility is to express an opinion on them based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Croff Enterprises,  Inc. as of
December 31, 1996 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.



Denver, Colorado
February 18, 1998                           CAUSEY DEMGEN & MOORE INC.



                                       F-2



<PAGE>



                             CROFF ENTERPRISES, INC.

                                  BALANCE SHEET

                           December 31, 1996 and 1997


                                     ASSETS

                                                          1996        1997
Current assets:
   Cash and cash equivalents                             $ 184,565  $ 166,883
   Marketable equity securities                             10,500     15,687
   Accounts receivable:
    Oil and gas purchasers                                  31,764     26,552
    Refundable income taxes                                  4,362      3,200
                                                             ------     -----

    Total current assets                                   231,191    212,322

Oil and gas properties, at cost, successful efforts method:
    Proved properties                                      329,700    429,903
    Unproved properties                                    101,901     97,102
                                                           --------    ------

                                                           431,601    527,005
   Less accumulated depletion and depreciation            (229,621)  (250,729)
                                                          ---------  ---------

     Net property and equipment                            201,980    276,276

Coal investment (Note 2)                                    82,533     16,277
                                                            -------    ------

                                                         $ 515,704  $ 504,875
                                                         ========== =========

                             See accompanying notes.
                                       F-3



<PAGE>



                             CROFF ENTERPRISES, INC.

                                  BALANCE SHEET

                           December 31, 1996 and 1997


                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                             1996       1997

Current liabilities:
   Accounts payable                                        $ 3,164    $ 4,378
   Accrued liabilities                                       1,660      2,605
                                                             ------     -----

      Total current liabilities                              4,824      6,983

Contingencies (Note 2)

Stockholders' equity (Note 4):
   Class A preferred stock, no par value;
     5,000,000 shares authorized, none issue                     -          -
   Class B preferred stock, no par value;
    520,000 shares authorized, 516,505 shares
    issued and outstanding                                 233,744    364,328
   Common stock, $.10 par value; 20,000,000 shares
    authorized, 579,143 shares issued                       57,914     57,914
   Capital in excess of par value                          672,799    542,215
   Accumulated deficit                                    (370,931)  (383,669)
                                                          ---------  ---------

                                                           593,526    580,788

   Less treasury stock at cost, 62,628 shares (1996)
    and 62,828 shares (1997)                               (82,646)   (82,896)
                                                           --------   --------

      Total stockholders' equity                           510,880    497,892
                                                           --------   -------

                                                         $ 515,704  $ 504,875
                                                         ========== =========
                             See accompanying notes.
                                       F-4



<PAGE>



                             CROFF ENTERPRISES, INC.

                             STATEMENT OF OPERATIONS

              For the years ended December 31, 1995, 1996 and 1997


                                                 1995       1996        1997
                                                 ----       ----        ----

Revenue:
   Oil and gas sales (Note 7)                 $ 195,834   $ 216,870   $ 193,099
   Gain on disposal of oil and gas properties     5,289      19,678           -
   Other income                                   4,307       7,503      14,790
                                                  ------      ------     ------

    Total revenue                               205,430     244,051     207,889

Costs and expenses:
   Lease operating expense                       44,954      47,759      26,966
   Production taxes                              10,630      10,597      13,858
   General and administrative (Note 3)           66,698      73,673      79,495
   Rent expense - related party (Note 3)         16,800      16,800      17,200
   Depreciation and depletion                    30,245      20,759      21,108
   Interest                                       4,592         670           -
   Write down of coal investment (Note 2)            -           -       62,000
                                                     --          --      ------

    Total costs and expenses                    173,919     170,258     220,627
                                                --------    --------    -------

Net income (loss) (Note 5)                       31,511      73,793     (12,738)

Net income applicable to preferred stock
  (Note 4)                                           -           -       49,262
                                                     --          --      ------

Net income (loss) applicable to common
   shareholders                                $ 31,511    $ 73,793   $ (62,000)
                                               =========   =========  ==========

Basic and diluted net income (loss)
   per common share (Note 6)                      $ .06       $ .14      $ (.12)
                                                  ======      ======     =======



                             See accompanying notes.
                                       F-5



<PAGE>



                             CROFF ENTERPRISES, INC.

                        STAEMENT OF STOCKHOLDERS' EQUITY

              For the years ended December 31, 1995, 1996 and 1997

<TABLE>

                                    Preferred stock      Common stock         Capital in
                                                                              excess of  Treasury  Accumulated
                                     Shares    Amount     Shares     Amount   par value    stock      deficit
<S>                                  <C>      <C>         <C>        <C>      <C>        <C>       <C> 

Balance, December 31, 1994                         -$ -    579,143   $ 57,914  $ 909,983  $ (72,806) $ (476,235)

   Purchase of 9,840 shares of
     treasury stock                         -         -          -          -          -     (9,840)          -

   Net income for the year ended
     December 31, 1995                      -         -          -          -          -          -       31,511
                                            --        --         --         --         --         --      ------

Balance, December 31, 1995                  -         -    579,143     57,914    909,983    (82,646)   (444,724)

   Issuance of preferred
      stock (Note 4)                  516,505   233,744          -          -   (233,744)         -           -

   Costs of issuance of preferred
     stock                                  -         -          -          -     (3,440)         -           -

   Net income for the year ended
     December 31, 1996                     -         -          -           -          -          -      73,793
                                           --        --         --          --         --         --     ------

Balance, December 31, 1996            516,505   233,744    579,143     57,914    672,799    (82,646)   (370,931)

   Purchase of 200 shares of
     treasury stock                         -         -          -          -          -       (250)          -

   Net loss for the year ended
     December 31, 1997                      -         -          -          -          -          -     (12,738)

   Preferred stock reallocation
      (Note 4)                              -    130,584         -          -   (130,584)         -           -
                                            --   --------        --         --  ---------         --          -

Balance, December 31, 1997            516,505 $ 364,328    579,143   $ 57,914  $ 542,215  $ (82,896) $ (383,669)
                                      ==================   ========  ========= ========== ========== ===========
</TABLE>


                             See accompanying notes.
                                       F-6



<PAGE>





                             CROFF ENTERPRISES, INC.

                             STATEMENT OF CASHFLOWS

              For the years ended December 31, 1995, 1996 and 1997

                                                  1995       1996       1997
                                                  ----       ----       ----
Cash flows from operating activities:
   Net income (loss)                          $ 31,511   $ 73,793  $ (12,738)
   Adjustments to reconcile net income
    (loss) to net cash provided by
    operating activities:
     Depreciation and depletion                 30,245     20,759     21,108
     Gain on disposal of properties             (5,289)   (19,678)         -
     Gain on marketable equity securities          (60)    (3,012)    (1,377)
     Loss on write down of investment                -          -     62,000
     Change in assets and liabilities:
       Decrease (increase) in accounts
        receivable                               4,022     (3,411)     6,374
       Increase (decrease) in accounts payable    (105)    (7,665)     1,214
       Increase (decrease) in accrued
         liabilities                             3,125     (2,002)       945
                                                 ------    -------       ---

            Total adjustments                   31,938    (15,009)    90,264
                                                -------   --------    ------

Net cash provided by operating activities       63,449     58,784     77,526

Cash flows from investing activities:
   Note receivable                                 700      4,800          -
   Proceeds from sale and leases of property    11,285    131,585          -
   Purchase of oil and gas interests           (10,557)   (15,875)   (95,404)
   Purchase of marketable equity securities          -          -     (3,810)
   Proceeds from sale of marketable equity
     securities                                  8,810      8,012          -
   Purchase of coal investment                (100,000)         -          -
   Distributions from coal investment            4,701     12,766      4,256
                                                 ------    -------     -----

     Net cash provided by (used in)
       investing activities                    (85,061)   141,288    (94,958)

Cash flows from financing activities:
   Purchase of treasury stock                   (9,840)         -       (250)
   Proceeds from note payable                   50,000          -          -
   Repayment of note payable                         -    (50,000)         -
   Cost of issuance of preferred stock               -     (3,440)         -
                                                     --    -------         -

    Net cash provided by (used in) financing
       activities                               40,160    (53,440)      (250)
                                                ------    --------      -----

Increase (decrease) in cash                     18,548    146,632    (17,682)

Cash and cash equivalents at beginning of year  19,385     37,933    184,565
                                                -------    -------   -------

Cash and cash equivalents at end of year      $ 37,933  $ 184,565  $ 166,883
                                              ========= ========== =========

Supplemental disclosure of cash information:

During the years ended  December 31, 1995,  1996 and 1997, the Company paid cash
for interest in the amount of $4,138, $1,115, and $0, respectively.

                             See accompanying notes.
                                       F-7



<PAGE>



                             CROFF ENTERPRISES, INC.


                          NOTES TO FINANCIAL STATEMENTS

                        December 31, 1995, 1996 and 1997




1.  Summary of significant accounting policies

Croff  Enterprises,  Inc. (the Company) is engaged  primarily in the business of
oil and gas exploration and production, primarily through ownership of perpetual
mineral interests in Utah,  Colorado and New Mexico,  and acquisition of oil and
gas leases.

A summary of the Company's significant accounting policies is as follows:

Use of estimates:

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Fair value of financial instruments:

The carrying amount of cash and cash  equivalents is assumed to approximate fair
value because of the short maturities of those instruments.

Marketable equity securities:

The Company has adopted  Statement of Financial  Accounting  Standards  No. 115,
Accounting for Certain Investments in Debt and Equity Securities, which provides
for reporting certain equity securities at fair value, with unrealized gains and
losses included in earnings.  The aggregate cost of marketable equity securities
at December 31, 1996 and 1997 was $4,295 and $5,958, respectively.

Accounts receivable:

The Company considers accounts receivable to be fully collectible;  accordingly,
no allowance for doubtful accounts is required. If amounts become uncollectible,
they will be charged to operations when that determination is made.

Oil and gas property and equipment:

The Company  follows the  "successful  efforts" method of accounting for its oil
and gas properties.  Under this method, all property acquisition costs and costs
of exploratory and  development  wells are  capitalized  when incurred,  pending
determination  of whether the well has proven  reserves.  If an exploratory well
does not result in reserves,  the capitalized costs of drilling the well, net of
any  salvage,  are  charged  to  expense.  The  costs of  development  wells are
capitalized, whether the well is productive or nonproductive.

                                       F-8



<PAGE>



                             CROFF ENTERPRISES, INC.

                          NOTES TO FINANCIAL STATEMENTS

                        December 31, 1995, 1996 and 1997

1.  Summary of significant accounting policies (continued)

The Company  annually  evaluates the net present value of future cash flows,  by
lease,  and records a loss if necessary,  when net book value exceeds  projected
discounted cash flow. The acquisition costs of unproved  properties are assessed
periodically  to  determine  whether  their  value  has been  impaired  and,  if
impairment is indicated, the costs are charged to expense.

Geological  and  geophysical  costs  and the  costs of  carrying  and  retaining
undeveloped  properties  (including  delay  rentals)  are  expensed as incurred.
Capitalized  costs  are  amortized  on a  units-of-production  method  based  on
estimates of proved developed reserves.

Income taxes:

The  provision  for income taxes is based on earnings  reported in the financial
statements.  Deferred income taxes are provided using a liability approach based
upon  enacted  tax laws and rates  applicable  to the periods in which the taxes
become payable.

Coal investment:

The investment was initially  recorded at cost.  Revenues and  distributions are
recorded using the cost recovery method (see Note 2).

Cash equivalents:

For purposes of the  statement of cash flows,  the Company  considers all highly
liquid debt instruments  purchased with a maturity of three months or less to be
cash equivalents.

Concentrations of credit risk:

Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash, cash equivalents and trade receivables.
The Company places its cash with high quality financial  institutions.  At times
during the year,  the balance at any one financial  institution  may exceed FDIC
limits.  At December  31, 1997,  the Company had cash  reserves of $157,970 in a
money market account at a brokerage firm..

2.  Coal investment

In March  1995,  the Company  purchased  a 2%  interest  in a limited  liability
company  (LLC) in exchange  for  $100,000,  $50,000 of which was borrowed by the
Company  pursuant  to a one year  10.5% bank loan,  guaranteed  by the  Company'
president.  The loan was repaid during 1996. The LLC acquired a mortgage note on
a coal mine in  Indiana,  and the Company had an option to acquire a 2% interest
in the mine for a nominal payment.

                                      F-9


<PAGE>



                             CROFF ENTERPRISES, INC.

                          NOTES TO FINANCIAL STATEMENTS

                        December 31, 1995, 1996 and 1997

2.  Coal investment (continued)

In December 1995, the major purchaser of coal from the mine, a utility, canceled
the contract.  In January 1996,  creditors of the coal mine filed an involuntary
petition under Chapter 7 of the Bankruptcy Code which, upon motion of the mining
company was converted to a case under  Chapter 11 of the  Bankruptcy  Code.  The
operations  at the mine have  subsequently  been shut down and the  assets  were
being liquidated  while the LLC sued the utility.  In July 1997, the trial court
ruled against the LLC. As a result, the Company recorded a write down of $62,000
to adjust its carrying  value of the  investment  to the  estimated  liquidation
value of cash, land and equipment remaining.

3.  Related party transactions

The Company retains the services of a law firm in which a partner of the firm is
a director  of the  Company.  Legal  fees paid to this firm for the years  ended
December  31,  1995,  1996 and 1997  amounted  to $2,222,  $4,398,  and  $2,086,
respectively.

The Company has a month-to-month agreement with an affiliated company to provide
for office services and sublease office space for $1,600 per month.

4.    Stockholders' equity

On  November  1, 1991,  the  Company's  shareholders  approved  the  issuance of
warrants to purchase  60,000 shares of the  Company's  common stock at $1.00 per
share to members of the Company's Board of Directors.  During 1995, the warrants
were extended and are  exercisable  at any time through  December 31, 1999.  The
warrants  must be  exercised  for not  less  than  5,000  shares  at any time of
exercise. As of December 31, 1997, no warrants have been exercised.

The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting   Standards  No.  123  "Accounting  for  Stock-Based   Compensation".
Accordingly,  no  compensation  cost has been  recognized for the warrants.  Had
compensation  costs for the Company's warrants been determined based on the fair
value at the extension date  consistent  with the provision of SFAS No. 123, the
Company's net earnings and earnings per share would have been reduced to the pro
forma amounts indicated below:

                                                  1995     1996       1997
                                                  ----     ----       ----
Net earnings (loss) applicable to
   common shareholders - as reported            $ 31,511  $ 73,793   $ (62,000)
Net earnings (loss) applicable to
   common shareholders  - pro forma             $  8,111  $ 73,793   $ (62,000)
Earnings (loss) per common share - as reported  $    .06  $    .14   $    (.12)
Earnings (loss) per common share - pro forma    $    .02  $    .14   $    (.12)



                                      F-10




<PAGE>


                             CROFF ENTERPRISES, INC.

                          NOTES TO FINANCIAL STATEMENTS

                        December 31, 1995, 1996 and 1997




4.    Stockholders' equity (continued)

The fair value of each warrant is  estimated on the date of extension  using the
Black-Scholes  option- pricing model with the following assumptions used for the
warrants extended in 1995:  dividend yield of 0%, expected volatility of 18.83%,
risk-free interest rate of 7.875% and an expected life of 4 years.

On February 28, 1996, the  shareholders of the Company  approved the creation of
5,000,000  authorized  Class A Preferred shares and 520,000  authorized  Special
Class B Preferred shares.

The Class A preferred  stock was authorized for possible  future  capitalization
and funding purposes of the Company and has not yet been designated as voting or
non-voting. Presently, there are no plans or intentions to issue these shares.

The Class B preferred  stock was  authorized  to protect the existing  perpetual
mineral interests and other oil and gas assets of the Company for the benefit of
existing  stockholders  while the Company  pursues other business  ventures.  In
October 1996, the Company issued to its common shareholders one share of Class B
preferred  stock for every  share of common  stock  held which  totaled  516,505
shares.  The  Class B  preferred  stock  has no par  value  and  limited  voting
privileges.  The Class B preferred  stockholders are entitled exclusively to all
dividends,   distributions,  and  other  income  which  are  based  directly  or
indirectly on the oil and natural gas assets of the Company. In addition, in the
event of liquidation, distribution or sale of the Company, the Class B preferred
stockholders have an exclusive  preference to the net asset value of the natural
gas and oil assets over all other classes of common and preferred stockholders.

The value of the Class B preferred shares was originally based on the book value
of the oil and gas assets at December 31, 1996. Effective December 31, 1997, the
Company's board of directors approved an allocation of oil and gas assets to the
preferred shares totaling $364,328.

5.    Income taxes

At December 31,  1997,  the Company had net  operating  loss  carry-forwards  of
approximately $450,000, which, if not used, will expire as follows:

        Year of expiration             Amount

               1998                  $    3,000
               2000                     447,000
                                     ----------
                                     $  450,000
                                     ==========

In addition,  the Company has a depletion  carryover of  approximately  $512,000
which has no expiration date.


                                      F-11




<PAGE>


                             CROFF ENTERPRISES, INC.

                          NOTES TO FINANCIAL STATEMENTS

                        December 31, 1995, 1996 and 1997





5.    Income taxes (continued)

The Company did not record an income tax provision for the years ended  December
31, 1995 and 1996 due to the utilization of a tax loss  carryforward for each of
the years.  The recognized tax benefit of the utilized  carryforward  was $8,400
and  $15,600  for  each  of  the  years  ended   December  31,  1995  and  1996,
respectively.   The  Company  has  a  financial   statement  loss  carryover  of
approximately  $382,000  remaining  at December  31,  1997.  The  difference  in
financial statement and tax return loss carryovers is principally the difference
in the  timing  of  deducting  intangible  drilling  costs.  Income  tax  credit
carryovers  for  financial  and tax purposes  approximate  $2,700 from  pre-1986
transactions.

As of December 31, 1996 and 1997,  total  deferred tax assets,  liabilities  and
valuation allowance are as follows:

                                                           1996          1997
                                                           ----          ----
Deferred tax assets resulting from loss carryforwards     185,000     $ 168,000
Deferred tax liabilities                                  (47,000)      (21,000)
Valuation allowance                                      (138,000)     (147,000)
                                                         ---------     ---------
                                                         $      -      $      -
                                                         =========     ========


6. Basic and diluted income (loss) per common share

Basic  income  (loss)  per common  share  information  is based on the  weighted
average  number  of  shares  of  common  stock  outstanding  during  each  year,
approximately  521,000  shares  in 1995 and  517,000  shares  in 1996 and  1997.
Outstanding warrants are not dilutive in any of the periods presented.

7.  Major customers

Customers which accounted for over 10% of revenues were as follows for the years
ended December 31, 1995, 1996 and 1997:

                           1995          1996          1997
 Oil and gas:
  Customer A              25.3%         23.7%         23.0%
  Customer B              11.9%         11.1%         12.2%
  Customer C              15.6%             *             *
  Customer D                  *         10.5%         18.4%

  * -  less  than 10%



                                      F-12




<PAGE>


                             CROFF ENTERPRISES, INC.

                     SUPPLEMENTAL INFORMATION - DISCLOSURES
               ABOUT OIL AND GAS PRODUCING ACTIVITIES - UNAUDITED





In November,  1982, the Financial  Accounting Standards Board issued and the SEC
adopted   Statement  of  Financial   Accounting   Standards  No.  69  (SFAS  69)
"Disclosures  about Oil and Gas  Producing  Activities".  SFAS 69 requires  that
certain  disclosures  be  made  as  supplementary  information  by oil  and  gas
producers whose financial  statements are filed with the SEC. These  disclosures
are based upon  estimates  of proved  reserves  and  related  valuations  by the
Company.  No attempt is made in this  presentation to measure  "income" from the
changes in reserves and costs.

The standardized  measure of discounted future net cash flows relating to proved
reserves as computed under SFAS 69 guidelines may not necessarily  represent the
fair value of Croff's oil and gas properties in the market place. Other factors,
such as  changing  prices  and costs  and the  likelihood  of future  recoveries
differing from current estimates,  may have significant  effects upon the amount
of recoverable reserves and their present value.

The standardized measure does not include any "probable" and "possible" reserves
which may exist and may become available through additional drilling activity.

The  standardized  measure of  discounted  future net cash flows is developed as
follows:

1.  Estimates are made of quantities of proved  reserves and the future  periods
    during  which they are  expected to be produced  based on year-end  economic
    conditions.

2.  The estimated future production of proved reserves is priced on the basis of
    year-end prices except that future prices of gas are increased for fixed and
    determinable escalation provisions in contracts (if any).

3.  The resulting  future gross revenue streams are reduced by estimated  future
    costs to develop and produce the proved reserves, based on year-end cost and
    timing estimates.

4.  A provision is made for income taxes based upon  year-end  statutory  rates.
    Consideration  is made  for the tax  basis  of the  property  and  permanent
    differences and tax credits relating to proved reserves. The tax computation
    is based upon future net cash inflow of oil and gas  production and does not
    contemplate  a tax effect for  interest  income and  expense or general  and
    administrative costs.

5.  The  resulting  future net  revenue  streams  are  reduced to present  value
    amounts by applying a 10% discount factor.


                                      F-13




<PAGE>


                             CROFF ENTERPRISES, INC.

                     SUPPLEMENTAL INFORMATION - DISCLOSURES
               ABOUT OIL AND GAS PRODUCING ACTIVITIES - UNAUDITED




                                   (continued)

Changes  in the  standardized  measure of  discounted  future net cash flows are
calculated as follows:

1.  Acquisition of proved reserves is based upon the standardized measure at the
    acquisition date before giving effect to related income taxes.

2.  Sales and transfers of oil and gas produced,  net of production  costs,  are
    based upon actual sales of products,  less  associated  lifting costs during
    the period.

3.  Net changes in price and  production  costs are based upon changes in prices
    at the beginning and end of the period and beginning quantities.

4.  Extensions  and  discoveries  are  calculated  based  upon the  standardized
    measure before giving effect to income taxes.

5.  Purchase of reserves are calculations  based on increases from the Company's
    acquisition activities.

6.  Revisions of previous quantity estimates are based upon quantity changes and
    end of period prices.

7.  The accretion of discount  represents the  anticipated  amortization  of the
    beginning of the period discounted future net cash flows.

8.  Net change in income taxes  primarily  represents  the tax effect related to
    all other changes described above and tax rate changes during the period.

All of the Company's oil and gas producing activities are in the United States.

Oil prices

During the year ended December 31, 1997,  crude oil prices decreased and natural
gas prices were stable.  The  ultimate  amount and duration of oil and gas price
fluctuations and their effect on the recoverability of the carrying value of oil
and gas properties and future  operations is not  determinable  by management at
this time.





                                      F-14




<PAGE>


                             CROFF ENTERPRISES, INC.

                     SUPPLEMENTAL INFORMATION - DISCLOSURES
               ABOUT OIL AND GAS PRODUCING ACTIVITIES - UNAUDITED



                 RESULTS OF OPERATIONS FOR PRODUCING ACTIVITIES

The  results  of  operations  for oil and gas  producing  activities,  excluding
capital expenditures,  corporate overhead and interest costs, are as follows for
the years ended December 31, 1995, 1996 and 1997:

                                               1995          1996          1997
                                               ----          ----          ----

Revenues                                  $ 195,834     $ 216,870     $ 193,099
                                          ----------    ----------    ---------

Lease operating costs                        44,954        47,759        26,966
Production taxes                             10,630        10,597        13,858
Depletion and depreciation                   30,245        20,759        21,108
                                             -------       -------       ------

                                             85,829        79,115        61,932
Income tax expense                                -             -             -
                                          ----------    -----------   ----------

Results of operations from producing
  activities (excluding corporate
  overhead and interest expense)          $ 110,005     $ 137,755     $ 131,167
                                          ==========    ==========    =========



                                      F-15



<PAGE>

                             CROFF ENTERPRISES, INC.

                     SUPPLEMENTARY INFORMATION - DISCLOSURES
                ABOUT OIL AND GAS PRODUCING PRODUCTS - UNAUDITED


                   STANDARDIZED MEASURE OF DISCOUNTED FUTURE
                       NET CASH FLOWS AND CHANGES THEREIN
                     RELATING TO PROVED OIL AND GAS RESERVES

                                                Year ended December 31,
                                              1995        1996        1997

Future cash inflows                         $1,480,000  $1,540,000 $1,487,000
Future production and development costs       (367,000)   (359,000)  (317,000)

                                             1,113,000   1,181,000  1,170,000

Future income tax expense                           -           -          -
                                                    --          --         -

Future net cash flows                        1,113,000   1,181,000  1,170,000

10% annual discount for estimated timing of
   cash flows                                 (377,000)   (415,000)  (411,000)
                                              ---------   ---------  ---------

      Standardized measure of discounted
        future net cash flows                $ 736,000   $ 766,000  $ 759,000
                                             =========   =========  =========
The following are the principal sources of change in the standardized measure of
discounted future net cash flows:

Beginning balance                            $ 730,000   $ 736,000  $ 766,000

Evaluation of proved undeveloped
   reserves, net of future production
   and development costs                         6,000      (5,000)   (22,000)
Purchase of proved reserves                     10,000      16,000     95,000
Sales and transfer of oil and gas
   produced, net of production costs          (140,000)   (264,000)  (152,000)
Net increase (decrease) in prices and costs     81,000     204,000    (20,000)
Extensions and discoveries                       7,000      74,000     53,000
Revisions of previous quantity estimates        36,000      (7,000)    28,000
Accretion of discount                            6,000      12,000     11,000
Net change in income taxes                           -           -          -
Other                                                -           -          -
                                                     --          --         -

Ending balance                               $ 736,000   $ 766,000  $ 759,000
                                             ==========  ========== =========


                                  F-16




<PAGE>



                             CROFF ENTERPRISES, INC.

                     SUPPLEMENTARY INFORMATION - DISCLOSURES
                ABOUT OIL AND GAS PRODUCING PRODUCTS - UNAUDITED

                      PROVED OIL AND GAS RESERVE QUANTITIES
                         (All within the United States)

                            Oil reserves Gas reserves
                                 (bbls.) (Mcf.)


Balance, December 31, 1994                      73,819     188,640

   Revisions of previous estimates               2,514      36,000
   Purchase of reserves                          2,500           -
   Extensions, discoveries and other additions       -      28,586
   Production                                   (8,278)    (35,250)
                                                -------    --------

Balance, December 31, 1995                      70,555     217,976

   Revisions of previous estimates              (2,493)     23,148
   Purchase of reserves                            700      26,000
   Extensions, discoveries and other additions     550      54,000
   Sale of reserves                            (12,414)          -
   Production                                   (5,886)    (46,000)
                                                -------    --------

Balance, December 31, 1996                      51,012     275,124

   Revisions of previous estimates                   -       7,000
   Purchase of reserves                          3,200      68,864
   Extensions, discoveries and other additions   3,034      10,000
   Sale of reserves                                  -           -
   Production                                   (5,295)    (46,222)
                                                -------    --------

Balance, December 31, 1997                      51,951     314,766
                                                =======    =======

   Proved developed reserves
    December 31, 1995                           53,508     204,865
    December 31, 1996                           38,101     265,748
    December 31, 1997                           39,339     301,343

Costs incurred in oil and gas producing  activities for the years ended December
31, 1995, 1996, 1997 are as follows:
                                                  1995        1996       1997
                                                  ----        ----       ----

Property acquisition, exploration and
   development costs capitalized              $ 10,557    $ 15,875   $ 95,404
Production costs                                55,584      58,356     40,824
Depletion and depreciation                      30,245      20,759     21,108

                                      F-17








<TABLE> <S> <C>


<ARTICLE>                     5
<LEGEND>
This schedule contains summary financial information extracted from form 10-Q
for period ended December 31, 1997 and is qualified in its entirety by reference
to such 10-Q for period ended December 31, 1997
</LEGEND>
<CIK>      0000025743                   
<NAME>     Croff Enterprises, Inc.                   
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                              DEC-31-1997
<PERIOD-END>                                   DEC-31-1997
<CASH>                                             166,883
<SECURITIES>                                        15,687
<RECEIVABLES>                                       29,752
<ALLOWANCES>                                             0
<INVENTORY>                                              0
<CURRENT-ASSETS>                                   212,322
<PP&E>                                             527,005
<DEPRECIATION>                                     250,729
<TOTAL-ASSETS>                                     504,875
<CURRENT-LIABILITIES>                                6,983
<BONDS>                                                  0
<PREFERRED-MANDATORY>                                    0
<PREFERRED>                                        364,328
<COMMON>                                            57,914
<OTHER-SE>                                         158,546
<TOTAL-LIABILITY-AND-EQUITY>                       580,788
<SALES>                                            193,099
<TOTAL-REVENUES>                                   207,889
<CGS>                                                    0
<TOTAL-COSTS>                                       40,824
<OTHER-EXPENSES>                                   179,803
<LOSS-PROVISION>                                         0
<INTEREST-EXPENSE>                                       0
<INCOME-PRETAX>                                    (12,738)
<INCOME-TAX>                                             0
<INCOME-CONTINUING>                                (12,738)
<DISCONTINUED>                                           0
<EXTRAORDINARY>                                          0
<CHANGES>                                                0
<NET-INCOME>                                       (12,738)
<EPS-PRIMARY>                                         (.12)
<EPS-DILUTED>                                         (.12)
        


</TABLE>